The Churchill Corporation Reports Strong Third Quarter Results
Churchill Delivers Earnings Growth as Seacliff Integration Progresses
CALGARY, Nov. 9 /CNW/ - The Churchill Corporation (TSX:CUQ) ("Churchill" or the "Corporation") announced today its results for the third quarter ending September 30, 2010.
All figures are unaudited and in Canadian dollars unless otherwise noted. Certain financial and operational measures referred to in this press release are not prescribed under Canadian Generally Accepted Accounting Principles ("GAAP"). For a description of these measures, see the Terminology section on page 30 of Churchill's third quarter report, management discussion and analysis ("MD&A").
QUARTERLY HIGHLIGHTS
- Revenue growth more than offset lower margins as Churchill posted
quarterly Earnings before Interest, Taxes, Depreciation and
Amortization ("EBITDA") of $29.0 million, a 68% increase over EBITDA
of $17.3 million reported in the third quarter of 2009.
- Net earnings from continuing operations were $13.3 million for the
third quarter of 2010, a 14% improvement over the $11.7 million
recorded in the third quarter of 2009.
- Stellar performance from Laird Electric Inc. ("Laird") and Insulation
Holdings Inc. ("IHI") drove organic growth.
- The acquisition of Seacliff Construction Corp. ("Seacliff") for
$387.2 million makes Churchill the third largest publicly listed
Canadian construction and industrial services company.
- Churchill received proceeds of $105.9 million via a common share
offering and $86.3 million via a convertible debenture offering to
partially finance the Seacliff acquisition.
- The Corporation closed a $200 million 3-year senior secured credit
facility with a syndicate of lenders, with a $75 million accordion
feature to support future initiatives. $80 million was drawn to
partially fund the Seacliff acquisition.
- This is the first quarter that the Corporation will report its
results under the General Contracting, Commercial Systems,
Industrial Services, and Corporate and Other business segments.
- The combination of Dominion Company Inc., a legacy Seacliff
company, and Stuart Olson Constructors Inc. is complete,
forming Stuart Olson Dominion Construction Ltd. ("SODCL"),
Churchill's General Contracting segment.
- Canem Holdings Ltd. ("Canem"), an electrical and data systems
contractor (another legacy Seacliff company) forms the
Commercial Systems segment.
- Laird, IHI and Broda Construction Group ("Broda") are combined
to form the Industrial Services segment. Broda was also
purchased as part of the Seacliff acquisition.
FINANCIAL HIGHLIGHTS
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Three Months Ended September 30
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($millions, except per 2010 2009 $ Change % Change
share amounts) ---------
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Contract revenue $386.0 $161.5 $224.5 139%
Contract income 48.3 27.1 21.2 78%
EBITDA from continuing
operations(1) 29.0 17.3 11.7 68%
Earnings from continuing
operations before income taxes 18.4 16.2 2.2 14%
Net earnings from continuing
operations 13.3 11.7 1.6 14%
EPS from continuing operations -
basic 0.57 0.66 (0.09) -14%
Net earnings per share - basic 0.57 0.86 (0.29) -34%
Work-in-hand(1) 1,317.1 770.2 546.9 71%
Backlog(1) 1,835.7 1,517.5 318.2 21%
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Nine Months Ended September 30
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($millions, except per 2010 2009 $ Change % Change
share amounts) ---------
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Contract revenue $785.7 $427.3 $358.4 84%
Contract income 97.1 67.2 29.9 44%
EBITDA from continuing operations 54.7 38.9 15.8 41%
Earnings from continuing
operations before income taxes 41.6 35.4 6.2 18%
Net earnings from continuing
operations 29.4 25.4 4.0 16%
EPS from continuing operations -
basic 1.51 1.44 0.07 5%
Net earnings per share - basic 1.52 1.54 (0.02) -1%
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(1) Refer to the "Terminology" section of the 2010 third quarter MD&A for
further details.
For the third quarter of 2010, the Corporation reported total contract revenue of $386.0 million and net earnings from continuing operations of $13.3 million, or $0.57 per basic share. These results include amortization of intangible assets related to the Seacliff acquisition of $5.0 million. This compared to reported revenues of $161.5 million, and net earnings from continuing operations of $11.7 million or $0.66 per basic share for the third quarter of 2009. EBITDA from continuing operations for the third quarter of 2010 was $29.0 million as compared to $17.3 million in Q3 2009, a 68% increase. Backlog grew 21% year-over year to $1.8 billion.
"The strength of our quarterly results reflects Seacliff's contribution to the quarter and the organic growth of the Churchill legacy companies," said Jim Houck, President and Chief Executive Officer. "Furthermore, these strong results were achieved while significant progress was made both on integration and on setting strategy and tactics to achieve our targeted $10 million of annual synergies in the future.
"In terms of our outlook, we see significant infrastructure opportunities for our General Contracting segment (SODCL) and Commercial Systems segment (Canem). These opportunities take a meaningful investment in time and resources to mature into awarded contracts, particularly when they involve client commitments to spending hundreds of millions of dollars. Additionally, at times we compete against other contractors who will aggressively court some of these opportunities, while we remain focused on fair compensation for our value-added services. This philosophy can make our acquisition of new awards irregular at times, although our pipeline is robust and the demand in our marketplace is strong. In the industrial contracting market, although project activity for 2011 appears to be strong, we expect to see some softening of our backlog until this project activity translates into subcontract awards either directly from clients or from engineering-procurement-construction companies. With oil prices firm in the 80 to 90 dollars per barrel range, we expect to see increasing oil sands activity during the balance of 2010 and into 2011. Looking forward, we will continue to execute on our strategies to leverage the additional opportunities and benefits created by the combination of Churchill and Seacliff."
A full copy of Churchill's third quarter letter to shareholders, management's discussion and analysis, financial statements and notes (unaudited) can be obtained at www.churchillcorporation.com or www.sedar.com.
To listen to the conference call discussing Churchill's third quarter results at 9:30 a.m. Eastern Time on November 10, visit http://www.churchillcorporation.com/live_events.php
ABOUT THE CHURCHILL CORPORATION:
The Churchill Corporation provides building construction, commercial and industrial electrical contracting, heavy construction and industrial insulation services to an array of public and private sector clients. Churchill operates 39 office locations throughout British Columbia, Alberta, Saskatchewan and Manitoba. Churchill common shares are listed on the Toronto Stock Exchange under the symbol "CUQ". www.churchillcorporation.com
FORWARD-LOOKING STATEMENTS
Certain statements in this Third Quarter Press Release may constitute "forward-looking statements". Forward-looking statements include, without limitation, statements regarding the future financial position, business strategy, budgets, litigation, projected costs, capital expenditures, anticipated synergies, financial results, taxes, plans and objectives of the Corporation. Many of these statements can be identified by looking for words such as "believes," "expects," "may," "will," "intends," "anticipates," "estimates," "continues," or the negative thereof, or other variations thereon. Although management of Churchill believes its expectations regarding future performance of the Corporation are based on reasonable assumptions and currently available competitive, financial and economic data, market conditions and operating plans, it can give no assurance its expectations will be achieved. The Corporation cautions that, by their nature, forward-looking statements, involve risks, and uncertainties and that its actual actions, and/or results could differ materially from those expressed or implied in such forward-looking statements, and that the aforementioned risks, uncertainties and actions could affect the extent to which a particular projection materializes. The Corporation assumes no obligation to update the forward-looking statements should circumstances or the Corporation's management's estimates or opinions change, except as may be required by law.
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For further information: James C. Houck, B.Sc., MBA, President and Chief Executive Officer, The Churchill Corporation, (403) 685-7777; Andrew Apedoe, Vice President Investor Relations & Secretary, The Churchill Corporation, (403) 685-7775, Email: [email protected]; Ken Wetherell, CFA, Director, Investor Relations, The Churchill Corporation, (403) 685-7776, Email: [email protected]
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